Construction activities in August remained weak sending the number of new houses to plunge after 16 months.

The Australian Industry Group (AI Group)/Housing Industry Association (HIA) performance of construction index (PCI) fell by 0.1 percent further to 43.2 in August. The percentage is well below the 50-point mark separating contraction from expansion.

The combined group report showed a reduction in construction activities in all sectors. House building fell to a reading of 38.4. Apartment building was at 47.6 and the commercial construction reading was at 42.9.

Even the engineering and construction reading was low at 40.3. The new orders sub-index down 43.5, while deliveries from suppliers went down 4.7 points.

The report stated that “Poor market demand, reduced work from school building projects together with intense competition to secure existing contracts impacted negatively across construction resulting in a drop in new orders, deliveries and selling prices.”

Housing Industry Association chief economist Harley Dale: “Rising interest rates earlier in the year played a role in dampening demand, while the ongoing lack of available finance for development is showing no material sign of improvement and is a major obstacle to a sustained recovery.”

AI Group director of public policy Peter Burn said, “The industry remains hampered by the failure of private demand to take up the slack left by the dwindling number of new public sector projects and the withdrawal of additional support for first home buyers.”